Daewoo blocks Polish-made car exports
By : Robert Wylot
Daewoo-FSO (http://www.daewoomotor.com.pl)'s plans to increase exports as a way of competing on the shrinking Polish car market have been scuppered by the company's parent, Daewoo Motor (http://www.daewoo.com.pl), which is accused of blocking exports to keep the regional market free for vehicles manufactured in Korea.
"We were planning to sell 40% of our cars abroad this year, but we haven't been given permission by Korea to export because they export to Europe themselves," said Krystyna Danilczyk, spokeswoman for Daewoo-FSO.
The Korean automaker, which declared bankruptcy last year, is negotiating with General Motors (GM) to take over the company. Meanwhile, it is still struggling to maintain its production and sales levels and analysts said that if the Warsaw plant is allowed to resume exporting, Daewoo-FSO could emerge as an unwanted competitor for the parent.
"Daewoo Motor is much more interested in selling Korean products in Europe (than Poland-made cars)," said Wojciech Drzewiecki, owner of Samar (http://www.samar.pl), an auto market consultancy. "It's not clear whether Daewoo Motor treats Warsaw as its own plant or as an unwanted child."
Deputy Economy Minister Edward Nowak said the Korean company is complicating issues for Daewoo-FSO by not being open about its trade strategy. "The Koreans should make their overseas trade policy clear," he said. Nowak heads the Polish negotiators in talks with Daewoo Motor and its Korean creditors. He said Poland-made cars are more competitive than Korea-made Daewoo units, adding that because GM does not want Daewoo's Warsaw operations, he's now looking for an investor for Daewoo-FSO.
"Daewoo-FSO is owned by Daewoo Motor and as long as there is no contract between Daewoo Motor and GM, we're trapped in the claws of unfinished talks," he said. "If the U.S.-Korean deal isn't ironed out by Aug. 15, I'll push for a meeting with the Korean side by the end of the month." He said that at the meeting he wants the go-ahead to look for a new investor in Warsaw and his agenda also includes discussing the export issue.
Daewoo Motor has limited the Warsaw plant's exports since its purchase in 1996. Nevertheless, Daewoo-FSO exported to a number of European countries up until last year including Bulgaria, Croatia and Italy. "We sold more than 100,000 cars in 2000, of which about 15% retailed abroad," Danilczyk said.
Industry analysts said exports could be a way of boosting sales for Daewoo-FSO, which only sold 27,000 cars in Poland in the first half of 2001, down 56% compared to 62,000 in the first half of 2000.
Overall new car sales dropped 31% year on year, with the economic downturn and customers' rejection of Daewoo vehicles to blame. "Buyers are showing a growing anxiety toward Daewoo models," Drzewiecki said. "The situation of the Warsaw plant won't improve until Daewoo Motor's future is clarified."
According to Nowak, Daewoo-FSO is still attracting investor interest despite the problems with Daewoo Motor. "There is still a chance to bring a new investor to Warsaw in 2001," Nowak said. "We have already been approached by two companies."
Daewoo Motor's representative in Poland, Yeo Sung-Kook who is also president of Daewoo-FSO left for Korea in late July. No one at Daewoo Motor was available for comment as the Business Journal went to press.
